The Meeting on Alternative Approaches to Debt Relief
took place from 24-25 September 1999 in Washington DC, USA. Organized
jointly by the Global Coalition for Africa (GCA) and the Center for
International Development, Harvard University (CID), the meeting attracted
approximately 60 participants, including government ministers and other
senior officials from highly indebted poor countries (HIPCs) and
representatives of non-governmental organizations (NGOs), academic
institutions, foundations, the media and international organizations such
as the African Development Bank (ADB) and the United Nations Development
Programme (UNDP).

The meeting aimed to bring together key stakeholders
to promote debt forgiveness and a transparent debt relief programme. Over
the course of the two-day meeting, participants considered HIPCs’ debt
repayment experiences, the recent Cologne Initiative of the Group of Seven
countries (G-7), alternative approaches to debt relief and the role of
NGOs and HIPCs in achieving debt relief. Participants were also addressed
by leading figures from the debt relief movement, including the musician
Bono of U2, economist Jeffrey Sachs and US Congressman Spencer Bachus. The
meeting’s main outcome was agreement on a set of principles on achieving
debt cancellation. The principles are intended to generate support for
redesigning and strengthening debt relief programmes at the highest
levels, particularly among bilateral and multilateral donors.

A BRIEF HISTORY OF THE PROCESS

Over the last decade, the mounting difficulties faced
by many developing countries in servicing their external debts and the
resultant reductions in public expenditure on health, education and other
social services have pushed the issue of debt relief to the forefront of
international dialogue on development. In response to growing concerns
about these unsustainable levels of debt, the International Monetary Fund
(IMF) and World Bank launched the HIPC Initiative in September 1996. This
initiative identified over 40 HIPCs requiring assistance in reducing their
external debt burdens to sustainable levels that could be serviced through
export earnings, aid and capital inflows. It set criteria for providing
assistance based on the net present value of these countries’ debts
compared to anticipated export earnings. Under this system, countries,
through default or by agreement with creditors, continued to accumulate
debt servicing obligations. Many HIPCs and civil society organizations
expressed concern that the initiative did not provide an adequate solution
to these countries’ debt-related problems, citing failure to offer
sufficient amounts of debt relief and protracted time periods of up to six
years for debt relief approval.

In response to these concerns, the G-7 considered a
proposal to revise the initiative at its Cologne Summit in June 1999. At
Cologne, the G-7 called for “faster, deeper and broader debt relief”
for HIPCs that demonstrate a commitment to reform and poverty alleviation
and announced the Cologne Initiative, which revises HIPC Initiative by
proposing more generous criteria for assisting HIPCs. The Cologne
Initiative helped stimulate increased international debate on debt relief
and reopened discussion on what the most effective approach to debt
reduction might be. Consensus remains elusive, however, with key
stakeholders, including HIPCs, donors and civil society expressing concern
about the long-term utility of the Cologne Initiative and promoting
consideration of an alternative proposal for total debt forgiveness.

REPORT OF THE MEETING

Participants at the two-day Meeting on Alternative
Approaches to Debt Relief met in morning and afternoon sessions on Friday,
24 September to hear keynote speeches and consider HIPCs’ debt repayment
experiences, the Cologne Initiative and alternative approaches to debt
relief. This was followed by a press conference calling for debt
forgiveness for HIPCs and a further keynote address in the evening. On
Saturday, 25 September, participants convened in a morning session to
discuss the roles of NGOs and HIPCs in achieving debt relief. The
following is a summary of the conference and its main outcome, a set of
principles on achieving debt cancellation.

OPENING PLENARY

Ahmedou Ould-Abdallah, Executive Secretary of the GCA,
welcomed participants and noted that the meeting was very timely given the
G-7’s recent Cologne Initiative and designation of the upcoming World
Bank and IMF joint annual meetings as the venue for developing concrete
debt relief measures.

Noting that there are several precedents for debt
forgiveness, he identified political will on the part of creditors as the
main catalyst for debt relief. He stated that the funds required to
achieve debt forgiveness are relatively small and called on donor
countries to write off their bilateral HIPC debts and adequately
contribute to the HIPC Fund to enable multilateral financial institutions
to cancel their portion of the debt. He said HIPCs’ savings from debt
repayments should go towards social spending, with HIPCs setting their own
priorities based on their individual circumstances and needs. He drew
participants’ attention to a recent High Level Seminar on Africa’s
External Debt that was organized by the Governments of Japan and Kenya,
the UN and the GCA and held in Nairobi, Kenya, where participants noted
the need to pursue “pro-poor” growth strategies and called for each
developing country to prepare its own comprehensive development strategy
that reflects its unique situation.

Ould-Abdallah highlighted the need for additionality,
stressing that donors should allocate new resources to finance debt
forgiveness rather than simply shift funds out of existing official
development assistance (ODA) budgets. He called for recent declines in ODA
to be reversed. Calling for more foreign direct investment, he said steps
must be taken to ensure that HIPCs’ credit worthiness is restored in
order to facilitate financing for productive projects. He emphasized that
the ideal solution to HIPC debt problems would be total debt forgiveness
and stated that, as a minimum, donor countries should make it a priority
to agree on and specify the actual measures to be taken by their
respective governments to implement bilateral and multilateral debt
forgiveness.

Kwesi Botchwey, Director of Africa Research and
Programmes, CID, highlighted the change of attitude on debt relief during
the last year and said this helped bring about the Cologne Initiative. He
stated that factors leading to this shift in attitudes included, inter
alia: a growing realization that the 1996 HIPC Initiative did not provide
an adequate solution; the German Government’s debt relief announcements
prior to the Cologne Summit; and the NGO community’s persistence in
advocating debt relief. In spite of this recent progress, however,
Botchwey warned against complacency and a return to a business-as-usual
attitude that might dampen enthusiasm for change. While noting that the
Cologne Initiative provides a more generous framework for debt relief than
the 1996 HIPC Initiative, he said it should not be considered a final or
permanent answer to the problem as, like its predecessor, it fails to
address adequately many relevant issues, such as the unique needs of
countries in post-conflict situations. He emphasized that the Cologne
Initiative does not change the basic framework of its predecessor and said
it should focus more on the impact of debt relief on government
expenditure. He also stated that the Cologne Initiative should enable
HIPCs to increase spending on social services, but cautioned that the
setting of arbitrary social targets by the IMF and World Bank would be
counterproductive. He said countries should be able to determine their own
priorities for spending. Underscoring a growing momentum for further
action on debt relief, he called for a concerted effort to push for more
progress and urged participants to take full advantage of the current mood
for change. He stressed that this meeting aims to critically review the
case for a more radical approach to debt relief and called for total debt
forgiveness in conjunction with increased ODA.

CONSIDERATION OF COUNTRY EXPERIENCES AND THE
COLOGNE INITIATIVE

Botchwey opened the floor for participants to make
general remarks on country experiences with the HIPC Initiative, asking
how HIPCs, and specifically African HIPCs, could organize and prepare
proposals in order to ensure that their specific needs are addressed.
Ould-Abdallah responded that regional meetings could facilitate this and
recalled a UNDP proposal, made at the High Level Seminar on Africa’s
External Debt in August 1999, for a forum for African ministers to discuss
the Cologne Initiative and issue a communiqué to further the debate. He
said such a meeting and resultant statement would be useful and timely.

Carole Collins, Jubilee 2000/USA Coordinator, noted
that debt relief is an ongoing topic of debate within the US Congress. She
said progress on the issue is hindered due to Republican opposition to
debt relief and proposals to relieve debt through diversion of development
funds. She noted that people in HIPCs often turn to NGOs for assistance
when governments fail to meet social needs and underscored that NGOs
cannot sustain the burden of providing services governments do not
deliver. She drew attention to the existing momentum for change and
emphasized that the meeting offered a unique opportunity to issue a public
statement that could encourage the G-7 to go further than the Cologne
Initiative. She underscored that Jubilee 2000 sees debt relief as the
first step toward reducing poverty.

Steve Radelet, CID, drew attention to an IMF
announcement to use gold sales to finance a portion of debt relief. He
stated that the IMF plan involves revaluing gold by selling it to HIPCs at
the IMF’s book value (approximately US $47 per ounce) and then buying it
back at market prices (approximately US $260 per ounce). Radelet explained
that this scheme would allow the IMF to comply with internal rules that
require gold to be resold at the price purchased while also providing
HIPCs with a source of debt relief. He said the proposal could signal that
the IMF is serious about debt reduction and catalyze other agencies to
take action. Collins asked why, if such book transactions can
“magically” erase debt, the debt cannot be forgiven without resorting
to such “contortions,” and asked what the underlying political reasons
for such a complex procedure might be.

Edith Gasana, Secretary-General of the Ministry of
Finance and Economic Planning of Rwanda, underscored the importance of
addressing post-conflict needs, such as rebuilding infrastructure and
securing drinking water. She emphasized the different circumstances and
needs of each country and said HIPCs must have sufficient resource flows
to support growth.

Emmanuel Anusionwu, Strategic Planning Division,
African Development Bank (ADB), highlighted a recent meeting in Paris with
donor countries and said it was evident that donors felt the IMF and World
Bank could do more to fund the Cologne Initiative. He noted that the ADB
had initially hoped for a budget of US $2 billion in 1998, only to learn
after a reevaluation of the ADB’s resource-raising capacity that no more
than US $600 million was available to it, leaving a shortfall of US $1.4
billion. He said this shortfall would force the ADB to draw on its capital
and noted that this smaller budget would lead to the diversion of
resources intended for development needs to cover countries’ debt
servicing obligations.

Peter E.M. Noni, Director of Economic Policy of the
Bank of Tanzania, said approval for debt relief for Tanzania is pending
and noted that this raises the question of how to maximize debt relief. He
noted that focusing funds on education and health alone would not bring
significant progress in terms of poverty eradication and underscored the
importance of addressing the agriculture sector. He noted an increase in
rural poverty due to poor weather conditions in recent years and a
resulting decrease in exports. Noni underlined the need to focus on
income-generating activities for rural populations in order to enable them
to become economically self-sufficient and to ensure a sustainable system.
He said that without exports this is not possible and stressed that the
agriculture sector must be addressed to increase exports. With regard to
the fiscal viability of HIPCs, he called for a framework that looks at
governments’ capacity to deliver required resources. He called for
clarification of future conditions for debt relief and expressed hope that
social rather than financial benchmarks would be applied.

Jean Barut, Senior Economist of the Policy Unit of
UNDP Africa, highlighted UNDP’s advocacy role in debt relief, the need
for capacity building and the role of UN agencies in helping countries
develop social programmes if this is deemed part of conditionality. He
emphasized that HIPCs should play a role in determining the terms of
conditionality. He identified governance and the social sector as areas to
consider for conditionality. He asked how to ensure that the soft loans of
today do not become the debt problems of tomorrow and called for
assurances that loans received today will result in the generation of
resources for repayment of those loans.

Astere Girukwigomba, Minister of Finance of Burundi,
said debt relief should be considered within a holistic, long-term
perspective on poverty alleviation. He called for post-conflict countries
to receive special attention and treatment. On the issue of
conditionality, he said conditions should depend on the circumstances of
each country and not be based on prescriptive lists developed by the IMF
and World Bank. He suggested that a committee of relevant organizations
should coordinate with HIPCs to establish country-specific conditions.

Anusionwu stated that poverty in HIPCs is so great
that the Cologne Initiative will not have an effect. He suggested that
post-conflict countries in particular require such a huge investment of
resources that their situation should not be considered in the context of
debt relief.

James Jonah, Minister of Finance, Development and
Economic Planning of Sierra Leone, stated that the Cologne Initiative was
a political response to pressure from civil society, with developed
countries simply trying to defuse this issue by using rhetoric designed to
appease public opinion. Botchwey agreed with this assessment, while noting
that such rhetoric nevertheless leads to expectations and sets an agenda
for change. Collins said public support for debt relief is growing and
encouraged participants to look critically at what the Cologne Initiative
offers and whether it is adequate.

In response to a participant’s question on how to
involve UN agencies in implementing debt relief, Barut said the UN is
attempting to coordinate its activities in order to be more effective and
avoid duplication and wastage. He said there needs to be increased
cooperation among UN agencies, the IMF, World Bank, countries and civil
society.

Sara Sievers, Executive Director, CID, said this
meeting was a timely opportunity to promote debt relief stridently, given
that there are imminent meetings of the G-24, G-7 and IMF-World Bank and
that the US House of Representatives will be considering the matter. She
said this meeting should produce a very clear document stating what HIPCs
need, why they need it and how the debt relief process can work.

KEYNOTE ADDRESSES

Kwesi Botchwey opened the afternoon session and
introduced Jeffrey Sachs, Director of CID, who welcomed Bono, musician,
and US Congressman Spencer Bachus, Republican-Alabama. Sachs highlighted
Bachus’ efforts within the US House of Representatives to approve debt
relief and noted Bono’s work as an activist in the global movement to
address the debt issue through the Jubilee 2000 campaign.

Sachs described the purpose of the meeting as a
brainstorming session between economic and political teams of HIPCs to
develop ideas on how to address debt relief. He said the arrival of the
new millennium and the social movement to eliminate debt had generated
momentum for progress, resulting in the Cologne Initiative. He lamented
that this initiative fell short of what he believed is needed and did not
offer a workable solution. He highlighted the history of IMF and World
Bank strategies to provide debt relief and eradicate poverty and described
them as being too little too late. He overviewed the initial 1996 HIPC
Initiative, noting that under it the attainment of partial debt reduction
was a six-year process that required countries to demonstrate progress
under the Enhanced Structural Adjustment Facility (ESAF) programme. He
said countries that succeeded in meeting the Initiative’s criteria were
eligible to have their debt reduced to between 200 and 250% of the net
value of annual exports.

Sachs criticized the initiative, noting that basing
debt reduction on exports alone disregarded the social situation within a
country and that the level set for debt reduction was arbitrary. He noted
that the Cologne Initiative: still requires a long period before relief;
provides limited relief; uses arbitrary indicators; and preserves the
IMF’s dominant position. He identified increased debt reduction to 150%
of annual exports and a provision that debt for HIPCs with a high
debt-to-GNP ratio should not be greater than 250% of net government
revenue as the only changes in the new initiative. He regretted that the
proposed debt relief target was not related to the needs of HIPCs and
pointed out that multinational investors and not HIPC governments often
receive the revenue from exports to illustrate the flaws in basing debt
relief on exports. He said the new strategy is predicated on the IMF and
World Bank remaining in charge of the entire process and noted that this
is paradoxical in light of a recent World Bank review detailing its
failure to deliver on environment and poverty.

Drawing participants’ attention to a bill on debt
relief under consideration in the US Congress, he noted that the
legislation as originally drafted proposes that the president “shall”
cancel concessional debt owed by September 30, 2001. It has subsequently
been modified, however, to state that the President “may” cancel
concessional debt without reference to a date. He speculated that the
proposed legislation would not be successful due to a lack of faith in
this approach.

He then discussed a recently published IMF and IDA
document on the implementation of the Cologne Initiative which calls for
an enhanced framework for poverty reduction to be agreed upon by each HIPC,
the World Bank and IMF, and noted that organizations that address
education and public health such as UNIDO, UNICEF and the WHO were
omitted. He emphasized that these institutions, as well as UNAIDS, UNESCO
and UNDP, must be involved in providing assistance in addressing social
issues. He underscored the need to “call the bluff” of the proposed
Cologne Initiative and called for something substantial and honest that
addresses HIPCs’ real needs.

Following this, Sachs broke HIPC debt down by
creditor categories, including private, bilateral, regional banks, IMF and
World Bank. He said half of HIPC debt is bilateral and should simply be
cancelled for all countries that can mobilize an appropriate internal
social programme. He said 90% of the US Government’s claims for US $600
billion from HIPCs were already written off in the US Government books as
US $640 million, meaning that US claims on HIPC countries could be
canceled with US $640 million. He encouraged countries to demand 100%
elimination of bilateral debt. On the issue of forgiving IMF debt, he
supported the idea of revaluing gold and said this could provide enough
resources to fully cancel all ESAF debt. He further noted that the IMF is
presently only willing to use 10% of its gold reserves to this end. On
erasing World Bank debt, he said the Bank has adequate reserves to absorb
loses from writing off non-concessional loans. He emphasized that
practical solutions can be found category-by-category and identified the
will to address the issue as the key obstacle. He said unwillingness to
forgive debt represented a game between the IMF, World Bank and White
House, motivated by the desire to retain control of HIPCs. He commented
that is unfair to try to run the world from Washington DC and that doing
so interfered with HIPCs’ governance and impeded governments’
autonomy. In closing, he called on countries to determine how to bring
about debt relief.

Congressman Spencer Bachus said greater public
awareness of HIPCs’ crippling debt burden and its impact on social
spending will provide the catalyst needed to mobilize the necessary
political will and asserted that the public will respond to advocacy by
famous people. He informed participants that the focus of US politicians
is usually on domestic problems rather than on the challenges faced in
other countries and stated that, although this not a high-profile issue in
the US, he will work for full debt forgiveness, as it is “morally the
right thing to do.”

Bono said that as a musician he is linked to others
in his profession who have sought to address important social issues, such
as the civil rights movement in the 1960s, the Vietnam War in the 1970s
and the famine in Ethiopia in the 1980s. He recalled an initial feeling of
euphoria and success when he helped to raise US $200 million to combat the
famine in Ethiopia, only to discover that this is what Africa pays on a
weekly basis to service debt. Noting all of the fanfare and fireworks
planned for the millennium celebration, he said the only idea big enough
to fill the shoes of this date is debt relief. Characterizing the argument
for debt relief as economic, moral and spiritual, he noted the widespread
support for the Jubilee 2000 movement, including from people of all
religions, economists and pop stars. He said his own conversations with
high level US officials, including President Clinton, had suggested that
there was a genuine desire to forgive debt. Bono drew attention to the
plight of Africa, the continent with the most offensive statistics known
to mankind, and stressed that its huge challenges must be faced. Noting
global interdependency, he remarked that it is in the interest of the US
to have new trading partners and new growth and that debt relief would
provide a way to jumpstart this process. He stated his desire to be a part
of restructuring the relationship between the so-called “developing”
and “developed” worlds.

In the ensuing discussion, Ann Pettifor, Director of
the Jubilee 2000 Coalition, said public opinion is being mobilized in
Europe, Japan and the US. She said she was not satisfied with the Cologne
Initiative and stated that when she met with Pope John Paul II in Rome on
23 September 1999 she asked him to call on the G-7 to meet again before
the end of the year to discuss this matter. She noted that 20,000 children
die each day in HIPCs and identified the pressure to repay debt, with the
effect this has on funding for vital social services, as a contributing
factor. One participant said the G-7’s concessions have resulted from
public pressure, meaning additional pressure will lead to further
progress. Another participant stated that it is morally wrong to punish
the poor and vulnerable because of debt repayment obligations that are not
of their making.

LETTER FROM POPE JOHN PAUL II

In a dinner address on Friday evening, 24 September,
Jeffrey Sachs read a letter written by Pope John Paul II the previous day
in support of the Jubilee 2000 debt relief campaign. The Pope recalled
that in the Bible the Jubilee was a time in which the entire community was
called to make efforts to restore to human relations the original harmony
which God had given to creation. He stated that during the Jubilee the
burdens that oppressed and excluded the weakest members of society were to
be removed so that all could share the hope of a new beginning. He noted
that today’s world, with widespread poverty and inequalities, has need
of a Jubilee experience. The Pope also wrote that the need for debt relief
is urgent and in many ways a precondition for the poorest countries to
make progress in their fight against poverty. He appealed to all involved,
especially the major industrialized nations, to “take a decisive step
towards definitively resolving the debt crisis.” Sachs praised the work
of Jubilee 2000 campaigners, and said the voice of Africa and the
countries that most need debt relief must be heard.

CONSIDERATION OF THE ROLE OF NGOS AND HIPC
COUNTRIES IN ACHIEVING DEBT RELIEF

On Saturday morning, 25 September, Bono opened the
session by discussing Ireland’s experience in recent decades in
developing from a highly indebted to a highly affluent country. He said a
focus on education, tax concessions to encourage foreign direct investment
and mobilization of the necessary external support, in this case from
Europe, were essential prerequisites for its development. He noted that
HIPCs are not receiving adequate support in their efforts to eliminate
poverty and the debt burden.

On the role of NGOs in achieving debt relief, Ann
Pettifor, Jubilee 2000 Coalition, outlined details of the Jubilee 2000
campaign. She said 17 million signatures had been collected on a worldwide
petition calling for debt forgiveness by the year 2000 and stated that the
campaign had drawn together people from all walks of life and all segments
of the political spectrum. She underscored that the campaign aims to
disseminate clear, transparent information that publicizes the key facts
about donor governments’ positions on debt relief in order to generate
the political pressure necessary to achieve positive change. She stated
that debt relief is a perfectly comprehensible issue that has been
obscured and clouded by people who want to keep the public uninformed.

Pettifor said the fact that international relations
has no equivalent to a domestic bankruptcy law means debt is not written
off and people in HIPCs are being burdened not only by debts incurred many
years ago under previous government administrations but also by the
considerable compound interest accumulating on these debts. She called for
an open and transparent debt relief process.

On the issue of HIPCsï¿½ role in achieving debt
relief, one participant asked what actions HIPCs could consider to
facilitate further progress. Pettifor suggested that politicians in HIPCs
could be instrumental in mobilizing public opinion and suggested that
African leaders could invite G-7 leaders to come to Africa for a meeting
on debt relief before the end of the year.

Bono asked participants whether they supported a
proposal for African leaders to collectively offer their continent as a
site for a G-7 meeting and to make a clear public statement that, although
the Cologne Initiative is a step in the right direction, HIPCs need to be
involved in decision-making on debt relief rather than having solutions
imposed by donors. Several participants endorsed this proposal.

Jean Barut, UNDP, informed participants that UNDP is
planning a meeting of developed and developing countries to discuss
NGOsï¿½ role in achieving debt relief. He also recalled UNDPï¿½s offer to
explore options for bringing together African leaders to discuss debt
cancellation.

Sachs praised the proposal to bring together African
leaders and supported both the UNDPï¿½s offer to play a role in helping to
facilitate this as well as the additional step of inviting the G-7 to
Africa. He noted that donor countries have accepted the principle that
there will be fairly deep debt relief and said it is important to push for
further progress by making it clear that what is on offer is not adequate
and is not happening fast enough.

A participant from Liberia noted difficulties in
transmitting information on developments in Africa to other parts of the
world and emphasized the need for allies to amplify the voice of Africa.
He encouraged efforts to strengthen civil society and noted that it is
weakest in post-conflict countries. He underscored the importance of
involving African fiscal and social policy institutions in the debt relief
process and called for action to focus the worldï¿½s attention on the
proposed meeting of African countries and the G-7. Bono asked which
leadersï¿½ participation would be crucial to generating the necessary
public interest. Another participant responded that key leaders from South
Africa and Nigeria must be involved and proposed that Jubilee 2000
activists make a trip to visit these leaders to secure their active
support and participation. He also said that leaders should be encouraged
to have the outcomes of the meeting endorsed by their parliaments.
Pettifor emphasized that leaders of Latin American HIPCs should also be
included.

Peter E.M. Noni, Bank of Tanzania, said the notion
that primary education is the most important HIPC need was inaccurate and
stated that investment in education should not be limited to primary
education but should include post-primary trade and skill-based technical
education. He emphasized that such education is necessary to enable
Tanzanians to find skilled employment. Another participant from Tanzania
emphasized ownership of the reform process and country determination of
priority areas for public expenditure. She called upon Jubilee 2000 to
assist with the education of civil society in HIPCs on the magnitude of
the debt problem and to establish contact with peace activists and women
activists in Africa. Pettifor supported these ideas, while noting the
financial limitations of the Jubilee 2000 campaign.

CONSIDERATION OF PRINCIPLES ON DEBT CANCELLATION

On Saturday, 25 September, Sachs introduced ten basic
principles based on the ideas and suggestions discussed at the meeting. He
noted that these principles had been kept general to accommodate the
diverse ideas expressed and said they should be something both debtors and
donors could agree to. Regarding a principle calling for countries to
prepare five-year social action strategies, pending approval by major
creditor groups, in order to qualify for debt relief, Sachs explained that
the objective was to ensure that debt reduction would be used for social
purposes. One participant suggested that the term ï¿½approvalï¿½ be
replaced with ï¿½review and suitable modification.ï¿½ On a principle
stating that participation in the ESAF programme should not be a
prerequisite for debt relief, one participant suggested adding that
countries should still have a macro-economic programme.

Regarding a principle requesting the social action
strategy to present strategic plans and monitoring mechanisms, one
participant broadened the principle to require mechanisms that can be
monitored both domestically and internationally. In discussing a principle
listing methods for funding debt cancellation, one participant remarked
that even if these methods were not employed, funding concerns should not
be presented as a barrier to debt cancellation, given the unprecedented
prosperity in developed countries. With regard to a principle calling for
national strategies to be constructed in a transparent and participatory
manner with civil society dialogue and stating that the international
community would only approve strategies developed in this way, some
participants questioned the use of the term ï¿½international communityï¿½
and preferred reference to major creditors.

On a principle calling for 100% debt relief for the
poorest countries, one participant requested specific reference to
post-conflict countries. Another participant said the principles should
emphasize the idea of new and additional resources. Emmanuel Anusionwu,
ADB, noted that the principles did not mention forgiveness of debt from
the ADB. Sachs responded that this omission was deliberate, noting
uncertainty over whether the ADB could easily absorb the losses. Pettifor
said the omission was problematic as it would overlook a substantial
amount of African countriesï¿½ debt. Sachs noted that the complication
with ADB debt is that it is money African countries owe to themselves. In
response to a question as to how repetition of the same situation in 20
years could be avoided, Bono said the principles being elaborated today
would reduce the risks of such an eventuality. In closing, Bono
underscored the need to speak with a collective, unified and clear voice.
He thanked participants for their contributions and drew the meeting to a
close at 1:30 pm.

PRINCIPLES ON DEBT CANCELLATION

The principles on debt cancellation agreed to by
participants at this meeting call for:

completion of the debt cancellation process by
the end of 2000 for qualifying countries;

preparation by debtor countries of a five-year
social action strategy that addresses their societyï¿½s urgent needs.
These strategies would qualify countries for debt cancellation and
would be prepared in consultation with the World Bank, regional
institutions and relevant UN agencies, with creditors and the debtor
country discussing the strategies and modifying them, as appropriate,
prior to approval;

development of national strategies in a
transparent, democratic and participatory manner that involves civil
society, with creditor and debtor governments developing joint
mechanisms to eliminate corruption;

consideration of debtor societiesï¿½ urgent human
needs and establishment of domestically and internationally verifiable
monitoring mechanisms in the social action strategies. The strategies
will also include intermediate targets and fiscal commitments for
funds released from debt service payments;

cancellation of debt based on social needs with
regard to urgent social conditions, the social action strategyï¿½s
aims and the debtor countryï¿½s fiscal position, but without reference
to debt-to-export targets;

funding for debt cancellation to come from donor
governments for bilateral debts, gold revaluations and loan loss
reserve accounts for IMF debts and loan loss reserve accounts for
World Bank debts. Industrialized countriesï¿½ unprecedented prosperity
means, however, that any concerns over the sources of funding should
not be used as a barrier to debt cancellation;

efforts by bilateral donors to increase in real
terms their contributions in grants and highly-concessional loans to
HIPCs;

concerted efforts by debtor countries to maintain
a stable macro-economic environment, although ESAF should not be a
prerequisite for debt cancellation; and

organization of a meeting, to be held before the
end of 1999, of leaders representing HIPCs and the G-7, with the
desired objective being debt cancellation and support for the
principles outlined above.

THINGS TO LOOK FOR

ANNUAL MEETINGS OF THE WORLD BANK AND IMF: The
annual meetings of the World Bank and IMF will take place from 25-30
September 1999 in Washington DC. For more information contact: World Bank/IMF
conference offices; tel: +1-202-473-7272; fax: +1-202-623-4100; e-mail:
bfcoffice@worldbank.org; Internet: www.imf.org/external/am/1999

NETAID CONCERT DAY: On 9 October 1999,
concerts will take place in the US, UK and Switzerland to raise awareness
on the fight against poverty and need for debt relief. Various artists,
including Bono, Sheryl Crow, Jewel and Jimmy Page will perform at the US
concert to be held at Giants Stadium. Bryan Adams, David Bowie, George
Michael, the Eurythmics and others will perform at Wembley Stadium and
Desï¿½ree, Bryan Ferry and Ladysmith Black Mambazo are among those to
perform in Geneva. For more information contact: Netaid; Internet:
www.netaid.org.

INDUSTRIAL PARTNERSHIPS AND INVESTMENT IN AFRICA: The
meeting on Industrial Partnerships and Investment in Africa will be held
from 20-21 October 1999 in Dakar, Senegal, and is expected to draw a wide
representation of African Heads of State and Ministers of Industry as well
as investors, donor organizations, multilateral agencies, development
finance institutions, NGOs and business associates. Organized by UNIDO,
the African Development Bank, the Economic Commission for Africa and the
Alliance for Africaï¿½s Industrialization, the meeting aims to address
misconceptions about investment in Africa. For more information contact:
Kadress Vencatachellum; tel: +43-1-26026 ext. 3543; e-mail: kvencatachellum@unido.org;
Internet: www.unido.org/doc/eventsall.htmls.

Sustainable Developments is a publication of the
International Institute for Sustainable Development (IISD) info@iisd.ca,
publishers of the Earth Negotiations Bulletin ï¿½. This issue is written
and edited by Laura Ivers laurai@dti.net
and Chris Spence spencechris@hotmail.com
(Team Leader). The Editor for this issue is Deborah Davenport ddavenp@emory.edu.
Digital content by Andrei Henry andrei@iisd.org.
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